The Hindu Business Line : Farm policy must plough a new furrow

To achieve the goal of 4 per cent agricultural growth, the farm focus must turn to dryland agriculture, wasteland development, horticulture, organic farming and warehousing. While on one hand, the policymakers are sanguine about the immense opportunities, on the other, they lament the constraints faced. There is a need for an integrated and holistic approach with regulatory reforms.

These days, policy pundits in the Agriculture Ministry are busy countering the adverse publicity of a laggard agriculture sector. In 2000, the National Agriculture Policy had set a target of 4 per cent for the decade ahead. Seven years later, the government is struggling to reach this target; the growth rate averaged around 2 per cent during the Tenth Plan.

While on the one hand, the policymakers are sanguine about the immense opportunities , on the other they lament the constraints faced — agrarian distress, agricultural risks, spatial and temporal climatic aberrations and vulnerable food security. The Ministry seems to have suddenly realised the problems of land degradation, soil nutrient deficiency, imbalanced use of fertiliser and depleting water resources, though thousands of crores of rupees have already been pumped into these sectors.

Reasons for poor performance

Traditional growth drivers of area expansion, yield improvement and institutional support services are no longer relevant. There has been a significant drop in the productivity of both food and non-food crops in the last decade.

The share of agriculture in gross domestic capital formation and gross domestic product (GDP) has declined from 8.93 per cent in the 1980s to 6.7 per cent in this decade.

The share of private investment, however, has been significant since the 1990s , compared to public investment; while the former has increased, it has not been able to fully compensate the drop in the latter. The agriculture policy should from now on focus on the following unexplored areas for better growth:

DRYLAND AGRICLTURE

Dryland agriculture that remains unexploited offers a great potential. Crop yield can be raised by initiating watershed development programmes to increase productivity, protect environment and conserve soil and water. However, government-initiated watershed development programmes have failed to achieve their objectives in the absence of a participatory approach, coordination among different departments, monitoring and dissemination of training and knowledge, and integration of the programme with processing, value addition and market developmentbesides being riddled with corruption.

A recent initiative by the private sector has proved effective in assuring water availability, increasing employment opportunities and providing value addition and better income for the farmers.

The Agriculture Ministry should encourage private investment in watershed development by creating an environment for their participation and investment.

The Government must strive to promote public-private partnerships. It must also develop a database of corporates involved in rural/watershed development programmes, wasteland development, afforestation and carbon trading.

With more inputs and active coordination among corporates, NGOs and the government, infrastructural gaps can be minimised.

There is an urgent need to converge various departments/programmes/schemes dealing with watershed development under a single nodal authority.

A comprehensive model encompassing modern soil and water conservation methods, with forward and backward linkages, will also help.

WASTELAND DEVELOPMENT

India has a huge potential in the promotion and cultivation of bio-fuel crops that can generate bio-fuels such as ethanol and bio-diesel. These crops are a viable alternative for the wastelands. India has unlimited potential for production of non-edible oilseeds such as jatropha, neem, mahua, karanj and linseed for bio-diesel production.

The cultivation of jatropha, the most viable crop for production of bio-diesel, should be encouraged as it can be grown even on marginal, wasteland or arid land, without displacing other crops.

HORTICULTURE

The next potential growth area is the perishable produce of fresh fruits and vegetables which give farmers options of crop diversification and alternative income opportunities.

However, it is essential that the current system of marketing of fresh produce be improved and the constraints affecting the interest of the key stakeholders removed.

Creation of terminal markets by organising growers, creating transparent and efficient price discovery mechanisms and interface with buyers (with state-of-the-art infrastructure and managerial competence) will go a long way in transforming the horticultural sector. Revitalisation of Agricultural Economic Zones is also essential.

ORGANIC AGRICULTURE

Organic agriculture can be encouraged through the PPP route. The private sector can help in extension of technology, promotion of farming communities and enterprises engaged in organic produce production, establishing links with the market and in research.

Here again, the public sector can play the role of a facilitator by creating an environment for international trade, formulating policies governing organic production and certification, drafting a legal framework and in research and development . In the cities, super- and hyper- markets can be considered as nodal selling points.

WAREHOUSING

The role of warehousing is crucial for agricultural growth. It enables farmers realise better returns for their produce as they have the option to store and sell when prices are favourable.

The recent policy initiatives regarding issuing of warehouse receipts as an instrument for increasing liquidity, and thus avoiding distress saleof produce, is welcome. On a macro-level, warehousing also reduces post-harvest losses up to 30 per cent by providing efficient cold chain and food security.

Increasing commercialisation of agriculture, emergence of commodity exchanges and introduction of collateral management agents and accreditation bodies have created a need for quality warehousing. It gives the private sector an opportunity to invest in the construction of warehouses.

The key issues in agri-logistics are non-standard pricing, limited financial capabilities of transporters, opportunistic profiteering, lack of scientific handling of produce and consequent high prices and limited choices for the consumers. Further complications arise from the perishable nature of the commodity and the fact that the requirement of cold chain varies for each commodity, even within the same class.

Thus the development of a cold chain network must be produce-specific. This would not only reduce wastage but also lead to a greater value in the hands of the farmer.

Given the interlinkages among the individual components of the agri value-chain, there is a need for an integrated and holistic approach with regulatory reforms, infrastructure development, credit availability and innovative business structuring so as to maximise stakeholder benefit and achieve overall development of the agriculture sector.

The main policy revamp in the agriculture sector should be to encourage contract and corporate farming to facilitate scale, spruce up cooperatives, encourage farmer associations, define standards and grades for agricultural commodities and develop mechanisms for communication and dissemination of transparent pricing, encourage the system of aggregators producers' cooperatives/banks to pick up the produce of small and marginal farmers, abolish or reduce fees, cess, taxes, duties, etc. on agricultural or horticultural produce procured through any registered contract-farming programme, remove the import duty on water-soluble fertilisers for horticulture production.

The Centre must gather the political will to initiate these measures to improve agricultural growth. Else, the four per cent growth rate in agricultural sector will remain a pipedream.

(The author is a Senior Under-Secretary in the Department of Agriculture and Cooperation, Ministry of Agriculture, New Delhi. The views expressed are personal.)

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